No Threat From Virtual Currencies

IMF Managing Director Christine Lagarde believes virtual currencies might just give existing currencies and monetary policy a run for their money. Speaking to an audience of central bankers at the Bank of England, Lagarde extolled the virtues of virtual currencies as an alternative to pounds and dollars, finextra reported. “Citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash—no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities,” she said. “If privately issued virtual currencies remain risky and unstable, citizens may even call on central banks to provide digital forms of legal tender.” While acknowledging that virtual currencies such as Bitcoin currently pose little or no challenge to the existing order of fiat currencies and central banks, Lagarde considers the underlying volatility and riskiness of crypto currencies as mere technological challenges that could be addressed over time.